'Polar vortex' chills home sales in Canada

Existing-home sales continue into fifth monthly decline as nation shivers through the winter

PUBLISHED : Wednesday, 19 February, 2014, 5:10am
UPDATED : Wednesday, 19 February, 2014, 5:10am

Sales of existing homes in Canada fell last month, the fifth in a row, as unusually harsh winter weather discouraged potential house hunters, according to the Canadian Real Estate Association (CREA).

Sales activity was down 3.3 per cent last month from December, data from the industry group for Canadian real estate agents showed.

Activity was 9.1 per cent below the 2013 peak hit in August. Sales were down on a monthly basis in more than 60 per cent of all markets last month, including declines in the greater Toronto and Vancouver areas.

The frigid temperatures brought on by the so-called "polar vortex" dented both resale activity and new construction in January as prospective buyers deferred home purchases, the report said.

"A number of buyers likely waited out January's deep freeze before going house hunting," CREA president Laura Leyser said.

But the report underscored the view that Canada's housing market, which boomed coming out of the recession but cooled after the federal government tightened mortgage rules, should be softer but relatively stable this year as borrowing costs rise.

"While weather may have constrained sales activity in January, the slowdown is more emblematic of the broader theme of a soft landing in the existing-homes market," said Mazen Issa, senior Canada macro-strategist at TD Securities in Toronto.

Although mortgage rates have slipped recently, the supply and demand fundamentals as well as stretched household budgets pointed to further softness, Issa said.

Mortgage rates should also move higher as the United States Federal Reserve continued to cut economic stimulus, he said. Actual sales edged up 0.4 per cent from last year.

The number of newly listed homes edged up 0.2 per cent on a monthly basis.

The number of months of inventory, which measures how long it would take to sell all homes on the market at the current activity pace, edged up to 6.4 months from 6.3 months in December.

The inventory measure indicates that the Canadian housing market remains well balanced, the report said.

CREA's home-price index rose 4.8 per cent from January last year, which was an increase from December's 4.3 per cent annual gain.

Price growth picked up in all property types tracked by the index, although two-storey, single-family homes led the pack with a 5.6 per cent yearly gain.

The biggest price increases were in Calgary and the greater Toronto area at nearly 9 per cent and 7.1 per cent, respectively.